147: Lessons from the Master Growth Hacker of Dropbox, LogmeIn, Eventbrite & Many More with Sean Ellis of Growthhackers.com

Sean Ellis, CEO, GrowthHackers

Sean Ellis is not just another marketer. In fact, he’s something entirely different. He’s the world’s first growth hacker.

Originally selling advertising in the print industry in Budapest, Ellis found his calling when a friend began building a new company on this relatively new thing called the internet. Despite not knowing that much about it, Ellis immediately recognized the opportunities that online marketing presented.

“Nobody knew much about the internet at the time. But because I was selling advertising, I really liked the idea of being able to target specific ad messages to specific people,” Ellis says.

In the years that followed, Ellis continued to stay ahead of the curve. While the rest of the world was still trying to grow their startups the traditional way, by pounding the pavement and paying for advertising with little understanding of the results they were getting, Ellis was already breaking the rules and experimenting with every possibility that the internet offered.

Instead of just focusing on marketing as something separate from the product that was being built, Ellis wanted to experiment and see if he could combine both product and marketing together. The result was a method he called “growth hacking,” a term he coined in 2010 that would come to revolutionize how startups looked at marketing, and eventually become the name of his company Growth Hackers.

He tested his methodology over the years and played a key role in successfully growing companies like Dropbox, Lookout, and Xobni, eventually becoming the go-to guy in all of Silicon Valley for startups looking to grow as fast as possible. Today, you’ll be hard pressed to find anyone with more experience, knowledge, or passion about the power of growth hacking.

Key Takeaways

The definition of growth hacking

Ellis’s early experiments with growth hacking and how they still work today

A behind-the-scenes look at what powered the rise of companies like Dropbox and Lookout

The framework Ellis uses for growing any business

How to identify the right strategies for you to become a fast-growth startup

Full Transcript of Podcast with Sean Ellis

Nathan: Hello and welcome to another episode of the Foundr Podcast. My name is Nathan Chan and I’m your host, coming to you live from hometown, homegrown Melbourne, Australia. And today you’re in for an absolute treat. I’m really, really pumped about today’s guest. For those of you that are not familiar with my background and one of my big passions, it’s marketing, growth hacking, building an audience, building a tribe. You know, just growing a product or a service through just great marketing and growth hacking and that’s something I’m really passionate about.

And today you get to hear me speak and interview someone who’s quite prolific as a marketer and a growth hacker. He’s somebody that’s been responsible for growth, for some of the biggest companies, tech companies in the world like Eventbrite or Dropbox, or LogMeIn. And he also started a couple of his own companies like growthhackers.com or Qualaroo. And he’s a tremendously smart guy, a very, very smart marketer and I go to town and really pick his brain and I do not hold back and extract a lot of gold for you guys just on how you use his framework to grow your business and how you should be thinking about growth. And I know a lot of you listening right now you will have, you know, be in the middle of running your business, just started, or scaling it so you’re gonna get a lot of value from this conversation.

So, before we jump in to today’s episode with Sean, I just wanted to let you guys know about a little competition giveaway we’re running. It’s something that I’m really, really pumped about. It’s called the 10K E-Commerce Megabundle. And as some of you guys know, I’ve mentioned we are launching our first course taught by an external instructor. This is the model that Foundr is moving down where eventually we’ll have hundreds of courses taught by experts on any topic that you guys tell us you need help with and the first one is how to start an e-commerce business. So we’re doing an awesome competition giveaway, 10K E-Commerce Megabundle, with everything you need to start and scale an online store. And it’s one of our promotions for our up and coming course and it’s called Start & Scale.

So this is what you get, you get one year’s free subscription to Shopify, which is well over $600, $700, then you get a branding identity done by us, our designer, Juliano, is actually gonna do branding identity. He’s gonna help you come up with the logo. I’m gonna give you a one hour mentor session with myself. We’re gonna give you access to our Instagram Domination Course as well so you can send traffic to your store because, you know, you guys know we’re pretty good at Instagram. And then you get a lifetime subscription to “Foundr Magazine”, and that’s just first place. And if you refer just five friends, we’ll give you a limited subscription to “Foundr Magazine” where you’ll get access to some back issues and pretty much this is really, really cool. It’s like a leaderboard competition giveaway. So the more people you refer, the more points you get and you can work your way up the ladder.

So to enter into this giveaway competition, just go to foundrmag.com/10kgiveaway. All right, guys, that’s it for me. If you are enjoying these episodes also, please, please, please do take the time to leave us a review. And also if you’d like to know more about our awesome Start & Scale course and you don’t wanna enter the giveaway, make sure you sign up at foundrmag.com/ecommerce. All right guys, now let’s jump into the show.

So the first question I ask anyone that comes on is, how did you get your job?

Sean: Well, I assume you have a lot of founders on, so that’s an interesting question for founders. I guess I gave myself the job when I decided to start the company. I was my first hire.

Nathan: And what first hire were you? Like talk to us a bit how you got started because you’re Australian actually, right? Or you used to live in Australia?

Sean: Yeah, originally by birth, but obviously I left when I was pretty young.

Nathan: Gotcha. So tell us what was… How did you get into starting companies? Just tell us about that.

Sean: Sure. I had spent most of my career actually joining other people’s early stage companies. Even the first one…I’d say the first two I had invested, the first one I invested six months before I joined the company. Even though I was an employee I was pretty tied up into the success of the company, and then same with the second one, and it was the same group of people who had done both of them. So when I decide to start my company it was really…it was really kind of the natural next challenge for me after I had been growing other people’s companies and wanted to see, gosh, can I start something from the very early stages myself and make it work?

Nathan: Got you. So was that first company Qualaroo?

Sean: So the first company, I’m still really working on it. So it’s involved Qualroo, it’s involved GrowthHackers. It’s been twist and turns. So the first one, it was actually a vision that I had for a marketplace for free apps and services, and I actually launched it at TechCrunch Disrupt and raised some pretty good venture capital on it, but got partway through the venture capital and just realized that a lot of my assumptions behind it were pretty flawed, and I was relying on Google to work a way that Google kinda changed the rules a bit, and so I just decided that we’d be better off essentially closing that down, taking the cash that we had left and acquiring some technology that was Qualaroo and then building the business around Qualaroo that we ran for a few years and built it up to couple of million dollars in recurring revenue and then sold it last year.

Nathan: Gotcha, I see. Before we talk about Qualaroo and GrowthHackers, I want to talk about growth. I know that you ran growth for Eventbrite but also Dropbox. And you coined the term “growth hacking” which is a massive movement that is among startup culture and also, I guess, in marketing as well. So, can you talk to us about your first marketing job then, and what that looked like for you, and what the challenges were compared to today? And yeah, I’m really curious. Talk to us about how you’d gone into, I guess, growth hacking and how you coined the term and your background in marketing.

Sean: Sure. That’s all kinda happening over a 20-year period, so it’s… Growth hacking, I coined the term “growth hacking” in 2010, but I really got started with online marketing in 1996 with this company that I had invested in, it was called uproar.com, and so the way I got started in online marketing was that I originally was hired to sell advertisements on this game site that had just started, and started basically the week that it launched so there were no users on it and we…and I just immediately got dropped into New York City, I joined in Budapest, Hungary and started calling on big Madison Avenue agencies to buy advertising in this game that didn’t really have any users in it. Now surprisingly they weren’t that interested in advertising in an empty game. So, a lot of my compensation was tied to the commissions that I knew were gonna be pretty tough to get in that situation, so I told the CEO that I thought we needed to be a little more aggressive about customer acquisition and he wasn’t real receptive to the message early on but, you know, within a couple of days, he said, “Okay, I’ve thought about it. You’re probably right. Why don’t you take a try at growing the customers?” So it started as a temporary role and it turned out I was pretty good at it.

Nathan: Yeah, gotcha. So what did you do to acquire customers in the early days for a company like that when . Yeah?

Sean: Yeah, so super early. I interestingly didn’t have a marketing background, but it turns out that a sales background was actually pretty good for it because in sales, you’re managing a funnel and it’s very numbers-based. I know I have to make this many phone calls to get these many meetings. These many meetings leads to these many sales and you’re just kinda working the numbers and it’s a numbers game. And so when I started with the marketing, first thing I did was I went out and bought some advertisements and it worked in a sense, we got a lot more users, but when I did the math, I thought, “Gosh, there’s no way that that money was spent well.” I was…you know, even though we doubled our user base, it was just…like I think I spent like $20,000 was the minimum buy that I could spend on. Yahoo! are one of the search engines, I think it was actually Excite, and so I told myself afterwards that I didn’t need to spend $20,000 to see if this was gonna work or not. I could’ve figured that out with $500. Then I started doing smaller buys and then I started just really trying to lean on a super good development team in Budapest, Hungary where we were building the games to build the tracking to let me know if I was wasting the money. And I think part of it I was, because I had invested this money, I was really sensitive about wasting money for the company and maybe more so than a normal hired marketer would be.

Nathan: I see. And what ended up happening with that company?

Sean: So that company actually became the number eight website in the world in terms of total usage time, so if you multiply the number of users times the average time per user. And then it was actually a really good success story of kind of learning how to do marketing on the fly that we ultimately… We kind of invented the first embeddable widgets so that the strategy that grew YouTube a few years later, we were doing that with games where basically games were embedded on other websites and we could start the gameplay experience on other websites and then lead them into play multi-player games on our site. And we sold the business, but it had listed on NASDAQ and we got really lucky that we raised a couple hundred million dollars the month that the NASDAQ stock market crashed in 2000, and so we were in a position to really survive it and sold the business about a year later to Vivendi Universal, but it was a fun ride.

Sean: Yeah, at one point it was like 4,000% up, and like a lot of other dotcoms, it went down but, yeah, it turned out for my first investment ever in my life to be a really good first investment. That really has bought me the flexibility to go for it and take a lot more risks in my career than I probably would have if I didn’t have a good nest egg to lean on.

Nathan: Yeah, wow, that’s awesome. And that’s interesting that you invested in the first startup you kinda worked at and did growth marketing. How did that come about?

Sean: I had been living in Budapest basically selling ads for a business journal, and heard from a friend that he was starting this internet company, and nobody really knew much about the internet at the time but I, because I was selling advertising, I really like the idea of being able to target specific ad messages to specific people, and I had been selling in print where obviously you couldn’t do that. So that was the thing that really attracted me. And the games company that he was building was meant to basically give cash prizes for people who played the games, but in order to qualify to play the game, she needed to…you needed to fill out registration information that would help us with all of that targeting. Surprisingly, it actually played out the way that he expected and that I had invested and hoped to do, but obviously a lot of things had to go right, and I think that the main thing that had to go right was we had to figure out how to acquire customers effectively and build a big user base on it.

Nathan: Yeah, got you. So you mentioned that one of your guys in that company’s strong channels was building, I guess, marketing into the product, kind of like what happened with Dropbox where do you that referral loop of viral loop. I’m curious, what was some other really strong growth channels for that business?

Sean: Well, basically it sort of had two pieces. I think one thing that we did, you gotta just kinda remember the time of what’s possible now with tracking because a lot of people weren’t doing it. So we were still the number one banner advertiser on the internet, but unlike a lot of other companies I knew down to the cent of if I spent a dollar here, how many ad impressions did I create across our network, and if I spend a dollar here, how many ad impressions? And this was like 1997, so most people weren’t able to really control their spending so that they knew exactly what their return on investment was. So I think that was a big advantage for us. And then when we had this content syndication in a widget piece, that brought our average acquisition cost down to the point where we had the lowest customer acquisition cost of any publicly traded company because we actually publicly traded from…even 1997, we had first listed on the Vienna Stock Exchange, and then one of the other European stock exchanges so by the time we listed it on NASDAQ in 2000, we’d actually been public for a few years.

Nathan: Yeah, gotcha. So, what happened next after you sold that company? Did you move to San Fran and go on to the Silicon Valley world or…

Sean: No, I was actually… So I was with them in New York and then I got sent back to run the European operations after the NASDAQ listing, so I stopped marketing for a little while and got to try my hand at operations a bit. I didn’t like it as much as marketing, especially in the time where we had to do some laying off, like a lot of internet companies at that time, but… So I was in Europe when we sold it, and joined…about two years later, the same group of people that started Uproar, we started LogMeIn. So LogMeIn, if you’re familiar with that company today, it’s about a $5 billion company, but we started it in Budapest, and that’s what I did next and kind of the same path where I was the first U.S.-based employee for that company as well. Got sent to Boston, and today it’s a pretty big Boston-based company.

Nathan: Yeah. So how did you grow LogMeIn?

Sean: So for LogMeIn, what was interesting is we identified the opportunity that people really needed an easy way to remotely access and control their computers. And in those days, it was kind of a slow, you know, this waterfall development approach, not really the lean startup approach of today. So, we kinda crawled in the cave and spent a long time developing the product and when we came back out, another company had actually launched their product, built a big user base and actually have even been acquired, and so that we were kind of competing against an 800-pound gorilla from day one, and that was GoToMyPC. Interestingly GoToMyPC was recently acquired by LogMeIn so it comes full circle, but we… sSo basically what I did with LogMeIn, as soon as I saw that somebody was already dominating the market, I recommended that the team that we, we figure out a disruptive pricing model, and so we launched one of the first freemium businesses that was out there. And there was a couple, like ZoneAlarms and AVG, so a couple in the security space had freemium business models, but it was pretty unusual at the time, and that was the model that we were able to break in and ultimately take over leadership of that space.

Nathan: Yeah, gotcha. That’s really interesting because I do know LogMeIn because before I started “Foundr Magazine”, I actually used to do IT support, and in my first IT support gig, you know, we had LogMeIn, we had a free version, we had a paid version, so I know that software quite well, and I used it like, what, 10 years ago.

Sean: Yep, so it’s…the team’s done really well. I ran marketing there all the way through the NASDAQ filing, which was kind of at a time where it took a long time from filing to actually get it out on the market but it… That was a really interesting business, and in fact that was the business that really taught me what was needed to…kind of what today is growth hacking, I made that realization when I was at LogMeIn, that it was…I originally tried to grow it the way that most people would grow a startup where I went out and again bought ads. And like a lot of people I knew, that landing pages would be a way to get some leverage on those ads, so it was actually kinda hard to get control from the dev team to be able to run experiments on our own landing pages.

But eventually I was able to, with the, you know, engineer that I’d hired on the marketing team, a kind of a design engineer, to carve out a subdomain and start to be able to run some experiments on those pages, but we still…we had a very flawed first-user customer experience that was preventing us from effectively spending money to grow the business. And so basically what we had was like over 90% of the people who signed up for the product never actually used it, so you can imagine that there’s no return on investment if they never use the product, they’re not going to buy the product.

So even though it was freemium, like if they never use the free version, there’s no word of mouth, there’s no chance that they’re ever gonna buy anything from us, and so we had to really fix that before we could grow the business. And so being able to make that case to our CEO, that this thing’s gonna be really hard to grow with this flawed first-customer experience, and he, to his credit, said, you know, “You’re absolutely right. This should be the most important initiative in the company right now,” and basically put a freeze on the product road map of anything else that we…that the team had been working on and it was all hands on deck, focused on getting that first-user experience right through lots of experimentation of every step in the on-boarding process that within…then about three or four months, we got it to about 1000% improvement in the sign up to usage rate, which was the difference in being able to grow that business or not.

Nathan: Yeah, gotcha. So the term growth hacking, would you say it’s the intersection of marketing and product? Can you give us like the formal definition that when you coined it, what… What is growth hacking, for people listening?

Sean: You know, that’s a good definition that you just said, the intersection of product and marketing. How I tend to describe it is it’s experimentation across that full customer journey. So, instead of just experimenting in the channels, it’s experimenting at every step in the customer journey. Unfortunately, a lot of the key levers to experiment on don’t sit within the marketing team, they sit in the product team, and so that’s the part that you said, that intersection between product and marketing. Being able to run experiments in product is critical to make growth hacking really work.

Nathan: Yeah, got you. Awesome. So, the freemium model was really, really strong. Once again, I’m seeing a recurring theme, building the marketing into the product, then you moved on to Dropbox?

Sean: Yeah. So, after LogMeIn, you know, I kinda did the self-reflection and look back and said, “Did we just get really lucky in these 2 businesses, 2 IPOs in a 10-year period? What was the common denominator? What really mattered? And the conclusion that I came to was it’s what we did in the first six months of trying to grow customers was that was the most important part. The things we figured out in that stage opened the door to the things that we continued to do going forward from there. So I thought, “Gosh, I’ve done 10 years of growing businesses, but only maybe like only like 1 year that is at stage that really matters, and building the skill set that really matters.” And so my goal coming off of LogMeIn was to get a lot of practice in that first six months of going to market for businesses. And so that’s… I joined Dropbox six months after I left LogMeIn and it was one of the…it was the first project where I was able to essentially negotiate my exit before I made my entrance, so I would be fully vested on stock after six months and be able to move on to the next company.

Nathan: And then talk to us about Dropbox because that was a very, very famous growth hack. Now, was this your idea? I want to get it right.

Sean: Yeah… I mean we were inspired by…we were inspired by things that…actually if you’ve of the company, Ring, the smart video doorbells, the guy who started that company had run some experiments around referral programs and how to build the incentives in, and had come up with this two-sided referral model or, you know, both sides of a referral getting an incentive, that was what had performed us when he tested it. And so I had tried it at a company where I was doing a little bit of consulting and it seemed to be working and so then we then we decided to implement it at Dropbox as well.

Nathan: Gotcha, because that’s when Dropbox blew up.

Sean: Yeah, it is, but I actually would credit that program less to the growth of Dropbox…I mean to me, it was an accelerant on something that was already working really well. So I think in the case of Dropbox, to me, what we did before that was probably more important, which was really tapping into who loved Dropbox as a product, and where did they come from. And when we dug into it, we found that there were some pretty distinct on-boarding paths into the product. So somebody who was coming in through a shared file had very different expectations about the product than somebody who was coming in through a shared folder, for example. So the folder, that person was expecting ongoing collaboration with a file. They just wanted their file, and so being able to message the product right…

And then the homepage, most of the people that came through the homepage were focused on Dropbox as a way to keep their data synchronized across multiple devices. And so there was all these different use cases around Dropbox that we had to optimize those initial user experiences for. So again, very similar to what we did with LogMeIn where we were optimizing that initial user experience. We had a bunch of them with Dropbox. And every time that we optimized another user experience, growth would accelerate, and so I think that’s the… Some of the big challenges there were if somebody used all of the functionality I just listed, they really love Dropbox, but if we tried to introduce them to all of that functionality too early, they got overwhelmed and would disappear.

And so if you think about like with technology, complexity is probably a bigger barrier to adoption than price or anything else, so we had to keep it really simple and keep people engaged before we introduced some of the complexity that would add value to their experience, And so all of that experimentation was hard work. It doesn’t make the headlines of what would be considered some great growth hack, but ultimately that was the stuff that was probably more important in the long run to the growth of Dropbox than even the referral program.

Nathan: Interesting. And then you moved on to Eventbrite?

Sean: Yeah. So I actually did…I actually did Eventbrite and Dropbox at the same time, so that I split my time equal, like 50/50, between the 2 companies.

Nathan: How did you manage that, like between the founders, both billion-dollar companies?

Sean: Yeah. Well, so part of it is that I learned that the…I could identify the opportunities for experiments a lot faster than those experiments could be implemented. And so what I found was that there’s actually a lot of waiting around. Even though I wanted to work really hard, there’s just a lot of waiting around, so it made more sense to actually split my time between the two companies.

Nathan: And how did you convince both founders that that would be okay? Because for me, if I had, you know, my head of growth or my first marketer splitting his time between another startup, I wouldn’t…that wouldn’t sit well with me, to be honest.

Sean: Yeah. So I had like a very specialized skill set that I was bringing to the table with these companies, and I was really passionate about figuring out what is this right sequence of activities to do in a new company when it’s going to market. And the truth is that I could I could optimize that… So before these two companies, I did just one company, and that’s where I learned the waiting around piece, but I documented things really tightly, and so I had a pretty good formula by the time I hit these two companies. So you know, the truth is that I… I mean it’s… Interestingly since then… So the co-author of my book, Morgan Brown, was working with me on GrowthHackers in a similar way. I only had 50% of his time, but he was so much more efficient and, I think, effective in what he could do that 50% of his time was like double anyone else’s time.

Nathan: Interesting. So we’re towards talking about your new book, “Hacking Growth” with Morgan, but before we get into that, there was a couple of questions I wanted to ask because one thing that I…there seems to be a few recurring themes, one, around you…every single one of these companies that you had worked on, you know, LogMeIn, massive, Dropbox, Eventbrite, like these are very, very big, big startups, even the first one that you talked about, the university, that I haven’t heard of but that sounded to be quite successful. How are you identifying these unicorn startups? Like what are the chance? That’s a pretty good track record. What are you looking for?

Sean: So I mean part of it was luck, you know, just to be honest. Yeah, I mean I just think, you know, the most that you can do as a marketer is really help a business realize its potential, and I just happened to land in places where there was a heck of a lot of potential to realize. Interestingly, the next one that I did after these two is also a billion-dollar company, it’s called the Lookout, so a mobile security company. And then the other one was called Socialcast that didn’t do quite as well but it sold for over $100 million to VMware within a couple of years, so it still did pretty well. But it’s, you know, it’s, to me I think that’s kind of the formulaic part that I was looking for, that there’s just…there’s certain principles that govern growth and, you know, the most important principle is that growth without value is unsustainable because growth without value is growth without retention. Value drives retention, and if you can’t retain users, you can’t grow users because all you can do is replace users.

And so that was what I really looked for in businesses was making sure that the handful of people who had started on a product actually considered the product something that was indispensable. And I came up with a survey question that gave me the ability to quickly uncover if that situation existed or not, and that survey question was just to ask existing users on the product how would they feel if they couldn’t use the product anymore. And I was looking for people who said that they would be very disappointed. And if I found enough people saying they would be very disappointed without the product, then I knew it was a must-have for at least some people, and if it’s a must-have for at least some people, then there’s a pretty good chance it’s going to be a must-have for a lot of people.

So one other thing that I did was I tried to make sure that each of these companies had at least one VC who had put, you know, north of $1 million already into the company. So I couldn’t really validate market size, but if a VC is going to put that kind of money into the company, they’re doing the research into what they think the market size opportunity was, so I kind of…I took the macro view in the decision to invest where, you know, invest my time and my reputation, and they were kind of taking that macro view.

Nathan: Gotcha. So you always use this small framework, not a large framework, before you started at any one of these companies?

Sean: Yeah, I mean the only thing…like I wanted to feel like I had at least two tricks up my sleeve for growing the business, not even tricks, but just two channels that I thought would be…had some potential for growing the business. If I went in with like zero inspiration before I started, then who knows if I’ll have inspiration at all? But if I have two, one of them is probably not going to work, and maybe even both of them won’t work, but at least I have the start of kind of like, “I think there’s a couple of different ways I would grow this business. It seems like users are valuing this business,” and between those things, I felt like the raw ingredients were there. And then, you know, for me, the last piece was the, you know, most important, I wanted to make sure that there were founder CEOs who I had really good chemistry with because if I didn’t trust them or they didn’t trust me, it just wasn’t…it wasn’t going to work, you know. If I didn’t trust them, then we could be hugely successful and then they would just say like, “Oh, we’re successful despite that crappy job you did,” or, you know. And the more likely case for most startups is that you’re going to struggle, and it’s very easy to point the finger at the marketing guy as the reason you’re struggling, so I wanted to have something where both sides were committed to figuring it out through those struggles, and we weren’t going to quickly get into the finger-pointing game.

Nathan: So after Eventbrite and Dropbox, you started Qualaroo?

Sean: Yes. Eventbrite, Dropbox, then I did Lookout, and a couple more companies, and then, yeah, and then I started this business through twists and turns. So Qualaroo, as I mentioned, was something that we sold but it was an asset sale, so we basically…we started GrowthHackers as kind of a side business to Qualaroo, as almost a tactic for growing Qualaroo, and pretty quickly realized that we thought GrowthHackers had a more interesting upside to it than Qualaroo did long-term.

Nathan: Got you. So you sold Qualaroo, and now you’re all in on growthackers.com?

Sean: Yeah, now we’re all in on GrowthHackers. And you know, the cash was helpful from selling Qualaroo, but for us the most important part was getting that undivided focus that you mentioned is really important for your head of growth, but it’s even more important for your CEO founder and, you know, and core team, so that was what we decided was, you know, let’s be hyper-focused on the growthackers.com opportunity.

Nathan: Yeah, gotcha, because, you know, I’m a big fan of growthackers.com. There’s always great, great content, really, really great case studies. You guys know what’s up. Now you have some sort of SaaS product, is that correct? Now, I haven’t looked at it but a friend told me about it, and it’s really around developing a growth framework of… Yeah, so can you tell us about that?

Sean: Sure, yeah. I mean what’s interesting, we launched this product last June, and it grew pretty quickly, but part of any business is deciding when is the product ready to scale a long term growth, and we… So you haven’t tried it and a lot of people haven’t heard about it because we haven’t really poured the gas on trying to grow it yet. Like we had… Ultimately what we need to do is be able to retain people on there pretty well and drive engagement. But generally what it is, as you hit on early on in our conversation, that growth works most effectively when marketing and product come together to manage growth. So it’s cross-functional, it’s about testing across that full customer journey. And so being able to manage that cross-functional…just collaboration, it’s very helpful to have a system, a collaboration system for managing that, and then ultimately for capturing the learning about how to grow your business. So we have basically a backlog of ideas that you build in there, and then as a team you determine which of those ideas are worth testing in which order, managing them against the high leverage objectives in your business so you can define the objectives inside the product, and then ultimately populating a knowledge base of what works and what doesn’t work to grow your business, so that you get smarter over time about how to grow the business

Nathan: Gotcha. And from my understanding just lightly on this product, you guys, the retention is not strong for this product, is that what you’re saying?

Sean: It’s not sufficient yet, you know. I mean ultimately we open the door to it and we…part of our expectation is that we wanted to see once you had a handful of people on there, that they start to draw in more people from the organization into the growth process, working on the growth process, and we didn’t see that happening. And so it’s less about the retention, more about the expansion, that we needed to see good expansion and…but we identified some pretty clear things in the product that we’re holding back that expansion, like our invite acceptance rate was only 30%, so basically one of the team members invites another team member, and only 30% of those people were accepting invites. And so that was one of the things that I said to the core team, that until we can double that invite acceptance rate, I think we’re not in a position where we can grow this business. And then another metric was the 30-day active after someone was invited. So are they still active 30 days after they’re invited? And that wasn’t quite where I wanted to see it either. But they focused on the invite acceptance rate first, and I just got a report yesterday that we’re upwards of about 70% invite acceptance rate now, so it got a lot better.

You know, with all of the stuff, it’s about really identifying what to focus on at any given point to make the business global. So if you remember back with LogMeIn, I tried to grow it, not growable for four months, I stopped trying to grow the business while we worked on the funnel, and then when I went back and tried to grow it afterwards, what previously I was able to spend $10,000 a month profitably. After I made those changes, I could spend $1 million a month profitably with a three-month payback on investment. So we were cashflow positive on that business all the way through the NASDAQ listing. So growth is something that needs to be both aggressive and patient depending on where you are with things, and so for me that was the… I’m still working hard to grow this business, I’m just not working hard to grow our SaaS business. We have our community, we have training, we have our conference, so there’s definitely…and we have talent solutions, so there’s other ways that we’re monetizing, just our SaaS product is not where it needs to be for us to start to pour a lot of resources and we’re trying to grow it.

Nathan: Gotcha, I see. That makes sense. So just before…I’ve got a couple of questions before we move to your book, one around your marketing stack. Today’s age…because I’m a very big…I’m a marketing and product guy, too, Sean, so I’m really enjoying this conversation, and I’m really curious, what’s your marketing stack look like? What tools are you using in today’s world? What are your must-haves?

Sean: Yeah, so I mean I think, to me, to me testing velocity is a lot of what defines… You know, when I see a team that’s doing a lot of testing, I generally see that team eventually be pretty successful growing the business. So what you need from a testing perspective are basically you need tracking, okay? If there’s no tracking, then you’re just blindly testing and you’re not learning anything. So for the tracking, I really like Amplitude, especially for early-stage startups. They offer like 20 million events per month for free. So they have a super generous freemium plan. And I actually think that they have probably the most intuitive interface of any of the analytics companies. And then Optimizely, I like just for being able to really, really make the testing easy. I also like Unbounce for just the landing pages, being able to quickly roll out landing pages. I’m trying to think. What else is… These would probably be the main ones.

Nathan: Do you use Kissmetrics?

Sean: So Kissmetrics has some new stuff that they’re coming out with that I’m really excited. We were on beta, I’m not sure if they’re allowing me to talk about that yet, but the new stuff that they have coming out, I think, is really good. But I, interestingly, was an advisor to Kissmetrics for a while, and when I saw what Amplitude was doing… That’s really the hard part when you’re… Like I’ve been an investor in a couple of companies that we’ve had as a part of our stack, and then my team explains why something else is better and you kind of…you have that little bit of conflict of interest. But, yes, so I’ve made shifts sometimes along the way that are not necessarily best for my short-term pocket but, you know, I owe it to my own investors to make sure that we’re…we’ve got the kind of best-of-breed in our stack at any given point. But it’s always just a snapshot, you know. Things are changing pretty quickly, and that’s why I’m really excited about what Kissmetrics has coming out as sort of their next-generation products. So we’ll see. We’ll see how that works. We also use Segment to basically make it much easier to swap in and out different solutions. If we’ve got all of the events captured in Segment, that makes it much easier.

Nathan: Gotcha. Okay, awesome. So let’s talk about “Hacking Growth”. Tell us about the book. What can people expect? Are you guys just gonna talk about, you know, just like so many different growth hacks that you guys have used and worked and which ones to choose? Tell us, what can we can expect?

Sean: No. it’s definitely not just a list of growth hacks. The problem with a book of growth hacks is that by the time you get through the publishing process, which is actually really slow, they’re not going to work anymore. So what we do, we have lots of examples in there, but not with the thought of implement this growth hack exactly as is. We have examples where we then talk about the principles behind the example of why it worked but, you know, on a higher level, it’s really like… Yes, so the principles and just how growth works is a big part of it. And then how to how to build a team around managing growth, what, you know, the daily tasks look like. And then we go into each of these key levers, so that really the playbooks of growth, where you’re looking at acquisition, which is where marketers traditionally focused on, but then particularly activation, which is super important for growth, how should you go about approaching activation, retention, monetization, all of these areas where you can start running experiments and usually see a lot more yield on experiments that are kind of deeper in funnel, and then that ends up making acquisition work a lot better. So the first part is really about the methodology, and then the second part is drilling into these playbooks.

Nathan: Gotcha. And you actually raised a good point around growth team. If somebody, you know, has a…you know, you found out listening right now, you’ve got a founding team, at what point do you need a growth hacker if the founder isn’t a growth hacker, like not a marketing person?

Sean: I think that the, one, if you’re a CEO, a co-founder of the team or of the company, you can’t just expect to hire someone else to come in and do it for you. That you are…you know, your failure and success is in your ability to acquire and retain customers. Like that’s… You can’t, if you’re serious about your business, you just can’t, like, just trust someone else to do that, and it’s way more intuitive on how to do it than you might think it is. And so what you want to be able to do is bring someone in who can potentially partner with you on that, but not something that you’re just abdicating the role and responsibility to. So in the early days, it’s…you are kind of looking for that unicorn person who is super dynamic, good with the numbers, good with creativity, understands the different platforms that are out there. And those people are pretty hard to hire, but I think if you can find one, then, you know, grab on to them, and if not, then learn the skills yourself because as a founder, no matter what your skill set is, you can probably learn those skill sets. So that’s the starting point. And then as it scales, it becomes less and less important to have one person who can do everything. You know, then it’s more about coordinating a team of people who can do each of the things that matter. But you know, most people, most people never get to the point where they start to really scale a team if they don’t nail the first part, so I generally focus on trying to get the first part right first.

Nathan: Yeah. I’m curious, when it comes to finding that all-rounder kind of growth person, do they have to have a background, done a bit of CRO, built funnels, you know, really analytical, you know, understand, like have the creativity around products? I’m curious, what exactly are you looking for? Because to do what you’ve done across all of these companies, you must be able to find great talent as well to be able to help you. It’s like you said, you know, you were able to split your time because a lot of it was waiting. You came up with the strategy, but there’s a lot of execution in the background while you’re waiting, right?

Sean: Yeah, so I think the biggest thing that you need in the person that you would hire is an entrepreneurial drive. So the ideal person is somebody who actually aspires to be a founder themselves at some point because, you know, a lot of it is, it’s not just a matter of just do, do, do, just as I’ve talked about, it’s a matter of saying, like, “We’re just going to completely waste our efforts if we send another 10,000 people into the website with how flawed our, you know, first user experience is,” so it’s somebody who can at least shine a light on the stuff that needs to be done. And then one of the advantages in an early-stage company is that you don’t have quite the silos that bigger companies have, so you have this malleable culture where ideally what you want to do is make everyone understand the importance of growth, and the role that they can play there. And so that’s why I’m saying that sometimes a CEO is going to be, or somebody on the founding team, is going to be the person with the entrepreneurial drive who’s going to be best suited for it because they became a founder because they have an entrepreneurial drive, so… But ultimately, you know, like what I did at Dropbox, I didn’t build the funnels, I did the research to make some suggestions on the test to be run, but I didn’t need to code it. I mean once, I edneed to make a case that it should be coded, so it’s a little bit different.

Nathan: Yeah, gotcha. I see. And you shouldn’t be looking for contractors or agencies, right? You are looking for founding team members.

Sean: Yeah… I mean there are agencies out there that can come help with this, but I just…I mean you do need to get so deep into it that I’m just not sure, just as you had doubts that I could, as part-time, be able to do this with businesses, I think… You know, I mean I still, 50% of every day, and my days were a lot longer than most people’s were, going into these businesses, so I think it’s just…you know, if you’re not pretty immersed in it, it’s tough.

Nathan: Yeah, gotcha. Okay, awesome. All right, two last questions, then we have to wrap, Sean, because I’m mindful of your time. A good talk though, man, because I’m a marketer, too, I’m pretty big on this stuff.

Sean: We’ll just turn off the recording and just keep on about this stuff.

Nathan: Awesome. Two last questions. If you could give a, because part of being “Growth Hacker” I’ve read as well is it’s a mindset more than ever, if you could give like a very, very simple framework for people that are listening, to approach growth, and how you do, and the mindset for you approaching growth, because I think that’s really, really key, because part of it is just being prepared to do a lot of failed experiments, and having a relentless focus on where you’re at across that user experience, whether it is, you know, customer acquisition and you got the product right, whether it is retention, like whether it is on-boarding, where’s that drop-off, and then, you know, you have to come up with a creative strategy, like you have, whether it’s pricing models, whether it’s, you know, freemium, whatever it is. So if you could, one, give a just a really strong framework that you use when you approach your start, like you know, when you approach a new company, how can you scale that company. And then best place people can find out more about you and Morgan’s book “Hacking Growth”.

Sean: Sure. So yeah, I think from the mindset perspective, it’s really having that recognition that everything that you’re doing can be improved. That just knowing that every point in your user on-boarding, there’s a better way to do it, and the only way to find out the better way is to try a bunch of stuff. And so it’s really… So then if it’s testing that ultimately yields the best results, then you also do want to focus that testing where it matters the most. And that’s kind of the hard part, but just for example, if you knew that one point in your funnel, there was 100% conversion rate, you know not to focus at that one point because you can’t get it to 101% conversion rate. So it’s never quite to that extreme, but if something’s at like 96%, and then in another part you’re losing 80% of your users in another section, you probably want to focus on the other 80%. And that, you know, the more that you can really understand the situation, so you’re not just randomly testing in those areas, but you’re trying to find out if people are abandoning your funnel, why are they abandoning it, and sometimes it’s as simple as just asking them, and the insights that they can give you are going to lead to smarter tests that are going to solve that problem.

But it’s really…really a lot of this is not creativity in the kind of Don Draper creativity sort of way, it’s just creative problem-solving. It’s like being frustrated by what is holding back our growth, and just finding what’s holding back growth, and experimenting until you fix that thing, and then moving on to the next thing. And ultimately when you get the first-user experience right, then being able to focus on channels and building channels, they’re gonna just work a lot better. And so too much early focus on channels is going to be frustrating, but you need to find the right balance because if no new people are coming in, then you have no signal on where you’ve got blockages happening. But it’s pretty, I think, logical and straightforward. It’s just it’s hard work and it’s something that at the very heart of it, the only reason it makes sense to do it is if you validated that somebody loves your product, or that hopefully a group of people love your product, and what you’re trying to do is replicate that experience.

So process real fast, as you kind of asked about process, it’s really about running that analysis to find the opportunities, and then when you find an opportunity, set an objective around that, trying to, “I want to move it from this to this,” give yourself a time frame for doing it, and then start just generating ideas for fixing whatever is not very optimal, and prioritize those ideas. And then run the tests. And every test that you run, you’ll learn something more about that situation, and just keep repeating that cycle until you until start to grow. So yeah, anything that requires clarification there? Does that sound… I mean for you, it might sound pretty straightforward, but hopefully for the listeners it will be straightforward as well.

Nathan: Yeah, yeah. Look, I think that makes sense. One thing that I’m wondering though, it struck out to me, is we’re currently hiring for a CRO, kinda CRO person, such a kind of…someone that just builds funnels, that’s all they do, just build funnels and optimize them extremely analytical. But from speaking to you, you could get that from a growth hacker, right? Because usually I’m the growth hacker in the company, but what are your thoughts there?

Sean: Yeah, I think that that conversion rate optimization and growth hacking are really kind of the same thing, but that growth hackers, that there’s this concept that we talk about in the book, we’re running out of time, but the North Star Metric. I mean, you can find other stuff about it online as well. The North Star Metric is really what drives a growth hacker, where the North Star Metric is a measurement of the value that’s being delivered in aggregate to your customers. And ultimately every optimization you make should be improving that North Star Metric and/or improving that value defined by the North Star Metric. So most conversion rate optimizers are a lot more local in their focus, they’re just trying to get more people from this step to that step, but I think in the long run, that they’re going to merge kind of into the same thing. It’s the process that the conversion rate optimizer uses is the same process that a growth hacker uses.

Nathan: Yeah, that’s right. So that moves you to my next question. Just like yourself, we have many different products, across the magazine, to educational courses, and then content, and then eventually we want to build SaaS tool as well. I’m really, really curious, just like you guys at GrowthHackers, you have many different products, how do you know what that North Star Metric is across your product suite?

Sean: That’s a really good question and that’s something that we’re kind of struggling with right now. I think once our SaaS product comes out, then it will be measured…I mean once we’re really focused on our SaaS product, it will be measured in…probably everything is sort of higher up in the funnel from the SaaS product, but right now right now the solutions are kind of endpoints and it is…each solution would really have more of its own North Star Metric right now.

Nathan: Yeah, gotcha. Because, you know, you guys, in many ways or aspects are a media company with growth hackers because you produce great content.

Sean: Yeah, so I really think of it as a platform with different monetization pieces plugged into that platform. But once our SaaS product is closer to what our long-term vision is for it, everything’s gonna be folded around the SaaS product. So even today when you’re on GrowthHackers, if you see an idea you like in an article, you can click and save it and it sends it right into your back login GrowthHackers, and so there’s there’s a level of integration. And even talent will fit into the into the platform where if you’re falling behind on your analysis, you can find analysts to complement your team, whether temporary or full-time. So you can start to see that everything eventually leads into the platform so we’re still in kind of a transitionary state right now.

Nathan: Yeah, gotcha. That’s really interesting. So how did you find out about this was the product that was going to intertwine between your others to eventually, “Yeah, I can see the road map now,” but how’d you work that out?

Sean: Well, so, one, I’m not sure how well it’s gonna work, you know. Ultimately it’ll play out the way I envisioned it but it’s…I think it’s just something that, you know, the more we execute the business, the more that you start to see what are the opportunities, where could this lead, and it’s something that we got really excited about as something that… We ultimately want to be that place where growth teams are spending their entire day, where all of the engagement and interaction…and we can even start to feed in content from our community into the product itself. So if you’re running a bunch of Facebook experiments, we’ve got a bunch of fresh content about Facebook and how the platform’s changing. So you can just see that it all integrates together, but there’s so many steps to getting to that point and probably at least half of our assumptions on how it’s gonna work are flawed. We just… We don’t know which ones are flawed so we have to kind of keep working our way through all of them and figure out the ones that are on point, are going to work the way we expect, and refine our assumptions around the ones that didn’t work.

I’m excited about it. I think the challenge that every business has is are you going to be able to figure it out before the team gives up, and before you run out of money. And you know, we’ve had lots of good wins along the way that I think keeps everybody engaged, and including investors, so that’s the… But that’s the big balancing act because it’s, you know, in hindsight, it all looks easy, but when you’re in the middle of it, it’s a lot of work.

Nathan: Love it, man. Awesome, dude. Well, look, where’s the best place people can find out more about your new book and it kind of extend on from this conversation that we have had around everything growth frameworks, like you said, the North Star, just everything on growth hacking and marketing, growing your company essentially?

Sean: Yeah, so the book, the best place is we set up a site for the book at growthhacker.com So not our regular domain. So remove the “S”, instead of growthhackers.com, that’s where we’re hosting information about the book with links where you can order it. And then we have training and we’re running a deal for podcast listeners today, we’ll be running it for a while where it’s growthhackers.com/training, and that’s really, you know, not something that, for your listeners that are in the early, early days, it’s probably not gonna be very useful, but if you’re starting to try to build a team that bridges the product and marketing, that course should be really useful for people.

Nathan: Fantastic. Look, Sean, this has been an absolute pleasure, man. Thank you so much for your time, and I look forward to grabbing a copy of the book and learning more.

Sean: Awesome. Thanks, Nathan. And I’ll see you next time I’m Down Under.